It is New York's first city-wide bus and subway strike in more than 25 years, and it is happening at the height of the Christmas shopping rush. Mayor Michael Bloomberg estimates the walkout could end up costing the city as much as $400 million a day. The last time transit workers went on strike in 1980, the walk out lasted 11 days.

The workers' contract expired last Friday, but officials of the Transport Workers Union and New York City's Metropolitan Transportation Authority kept talking until an hour before midnight local time Tuesday.

The two sides are divided primarily over wages. The transit authority did agree to drop a controversial plan to raise the retirement age for new employees.

Shortly before workers began the morning rush, union president Roger Toussaint announced that the 47-member executive board of the transit workers union had voted to authorize a strike. He asked commuters for patience.

"To our riders, we ask for your understanding and forbearance," he said. "We stood with you to keep token booths open, to keep conductors on the trains. To oppose for your rights. We now ask that you stand with us."

Public employees are barred under New York state law from going on strike, and the union could be fined heavily for every day its members are not on the job. Individual workers could also be fined two-days' pay for every one day they are on strike. It is a possibility that transit authority chairman Peter Kalikow insisted would become a reality.

"These are bullying tactics [the strike]. We will not accept them," he said. "Every effect that the law allows will be brought to bear on all striking members."

The city does have a strike contingency plan. Certain streets have been restricted to emergency vehicle use only. More than 40 sites throughout New York have been designated carpool staging areas. All vehicles entering the heart of Manhattan will have to have a minimum of four passengers.

The Taxi and Limousine Commission has amended its regulations, so that drivers can pick up multiple passengers at bus stops - a practice that is normally not legal. Some cab drivers, however, have announced they will not go along with the plan, because they see it as union busting.